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Quote of the Day
“Gentlemen, the war must go on until this rebellion is put down, if we have to out-paper [the south] until it takes $1,000 to buy breakfast!”
-Salmon Chase (Treasury Secretary to Abraham Lincoln) in 1861. Source: Panic, Prosperity and Progress
June 30th – This Day in Stock Market History
June 30th, 1864 – The U.S. Treasury stops the issue of “greenbacks”. Greenbacks, which got their name from the green ink used to print the back side of the bill, were first authorized on July 17th 1861 to help finance the Civil war and were the first non-interest bearing notes created by the U.S. Government. At the time $150 million in greenbacks were authorized, however by 1864 $431 million worth were outstanding. Between July 1861 and June 1864 the money supply of U.S. Treasury issued currency increased 450-fold!
Greenbacks were not backed up gold or silver unlike previous currencies, but the U.S. had no other options as it teetered on the edge of bankruptcy during the civil war. Initially, some of the public was hesitant to trust U.S. issued currency that was not backed by gold, as the country had been operating almost solely on bank-issued currency since President Jackson abolished the U.S. Central bank in 1833. But due to efforts from bond salesmen and Salmon Chase, the people eventually got on board.
The value of the greenback varied wildly during the civil war, at it’s low point, July 11th, 1864 it took $285 (in greenbacks) to purchase $100 (in gold-backed currency) in gold.
Source: Wall Street and the Stock Markets: A Chronology
Best June 30th in Dow Jones Industrial Average History
1930 – Up 3.29%, 7.22 points.
Worst June 30th in Dow Jones Industrial Average History
1932 – Down 1.88%, 0.82 points
Read of the Day
Although the ravenous inflation seen in the 1860’s is unlikely to be repeated, even much more modest amounts of inflation can have a huge impact on your investment portfolio. The U.S. also faced another period of inflation in the late 1970’s, where inflation reached nearly 15%.
During this time, Warren Buffett wrote an article for Forbes Magazine on the effects of inflation, and some ways to protect your investments from it. The article is one of the all time classics in Forbes, and is available for reading here:
Go To Next Day: July 1st, 1923 – Ben Graham starts his investment firm –>